Issue 33

Shanghai Weekly Bulletin

No. 3, February 2024

Shanghai Weekly Bulletin is an information service presented by the Foreign Affairs Office of Shanghai Municipal People's Government in collaboration with Wolters Kluwer to foreign-funded enterprises, foreign-related institutions as well as people from overseas living in Shanghai. Covering major national and Shanghai foreign-related news, event information, policy Q&A and interpretations in the past week, it keeps you up-to-date with the latest foreign-related policies and developments in Shanghai.

Laws and Regulations

【National】

1. China Approves the Development Plan of Shanghai Eastern Hub International Business Cooperation Zone 

【Keyword: Eastern Hub International Business Cooperation Zone】

The State Council has principally approved the General Plan of Developing the Eastern Hub International Business Cooperation Zone in Shanghai, according to a reply released by the State Council. The document urges to better exert Shanghai's strengths in opening-up, make good use of the institutional innovation achievements of the China (Shanghai) Pilot Free Trade Zone by relying on the city's existing status as an international aviation hub, and create a highly convenient vehicle for international business communications. It also stresses effort to ensure both development and security, and better connect domestic and international markets and resources, so as to make greater contribution to high-standard opening-up.

Source: Website of the Chinese Government

https://www.gov.cn/zhengce/content/202402/content_6931997.htm

2. China Exempts Stamp Tax on Offshore Trade in Shanghai Free Trade Zone 

【Keywords: Offshore Trade; Stamp Tax】

The Ministry of Finance (MOF) and the State Taxation Administration (STA) recently released the Circular on the Pilot Implementation of Preferential Stamp Tax Policy on Offshore Trade in China (Shanghai) Pilot Free Trade Zone and Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone, which states that, during the period from April 1, 2024 to March 31, 2025, the contract note of offshore resale business carried out by the enterprises registered in China (Shanghai) Pilot Free Trade Zone and the its Lin-gang Special Area will be exempted from stamp duties.

Source: MOF

https://szs.mof.gov.cn/zhengcefabu/202402/t20240218_3928665.htm

【Shanghai】

1. Shanghai Releases Measures for the Management of Competitive Allocation of Renewable Energy Projects

【Keyword: Renewable Energy】

Shanghai Municipal Development and Reform Commission released on February 18, 2024 the Shanghai Municipal Measures for the Management of Competitive Allocation of Renewable Energy Projects. The document contains eleven articles and is applicable to the competitive allocation of offshore renewable energy projects in selection of project investors, and the competitive allocation of guaranteed and grid-connected onshore wind power and photovoltaic power projects to determine the scale of grid connection. The document took effect on February 22, 2024 and will remain valid until February 21, 2029.

Source: Shanghai Municipal Development and Reform Commission

https://fgw.sh.gov.cn/fgw_gfxwj/20240219/0d6bf55fc254408a8fd0c84fbeb1bad4.html

2. Shanghai Introduces Measures to Further Improve Business Environment

【Keyword: Smooth Financing】

The Shanghai Regulatory Bureau of the National Financial Regulatory Administration (NFRA) recently issued the Circular on Smoothing Financing Channels to Further Improve Business Environment for High-quality Development of the Financial Sector in Shanghai. It introduces 16 policy measures in five aspects, including smoothing financing channels and improving the availability of financial services, optimizing financing methods and improving the convenience of financial services, and focusing on serving the real economy and improving the strategic nature of financial services.

Source: NFRA's Shanghai Regulatory Bureau

https://www.cbirc.gov.cn/branch/shanghai/view/pages/common/ItemDetail.html?docId=1152414&itemId=998

3. Shanghai Issues Action Plan for the Sci-tech Innovation and Development in Transportation 

【Keyword: Transportation; Sci-tech Innovation】

Shanghai Municipal Transportation Commission and Shanghai Municipal Commission of Science and Technology recently issued the Action Plan for the Sci-tech Innovation and Development in Transportation. The document proposes seven major tasks, including developing technologies for the construction, management and maintenance of infrastructure, improving our capabilities of developing transportation equipment independently, promoting digital transition of transportation services, exploring development of green transportation technologies, advancing the integrated development of smart transportation, enhancing safety emergency capabilities, and strengthening sci-tech innovation capabilities.

Source: Shanghai Municipal Transportation Commission

https://jtw.sh.gov.cn/zxzfxx/20240218/70c71bf158a3427696cd475bb5ea878e.html

4.Pudong Issues Document to Deepen Reform on Registration of Business Scope of Enterprises

【Keyword: Business Scope; Registration Reform】

The People's Government of Pudong New Area recently issued the Several Provisions on Deepening the Reform on Registration of Business Scope of Enterprises in Pudong New Area. With 11 provisions, the document stipulates that if an entity changes its registered business scope, it shall apply to the registration authorities for the change of registration without having to renew a paper business license. The document took effect on February 18, 2024 and will remain valid until February 17, 2029.

Source: People's Government of Pudong New Area

https://www.pudong.gov.cn/zwgk/glcs-elesn/2024/37/322935.html

One Week in Shanghai

【Latest News】

1. 2024 List of Major Projects in Shanghai Released

【Keyword: Major Projects】

The 2024 List of Major Projects in Shanghai was recently released. A total of 191 projects were on the list, including 76 related to science and technology industries, 23 related to people's well-being, 16 related to ecological progress, 67 related to infrastructure facilities, and nine related to urban-rural integration and rural revitalization. The document also lists 26 preparatory projects. 

Source：Shanghai Municipal Development and Reform

2. Shanghai Data Exchange Launches Digital Asset Transactions

【Keyword: Digital Asset Transactions】

Shanghai Data Exchange has officially launched digital asset transactions, and trading activities continue to increase. As digital technologies mature and the digital economy becomes more active, digital assets will play a bigger role in economic and social development, boosting innovation and growth in various sectors.

Source: Pudong Release

【Culture & Art】

1. Titian Vecellio Masterpiece Flora to Be Displayed in Shanghai

【Keyword: Titian Vecellio; Flora】

The Venetian Paintings Exhibition at the Uffizi Galleries - Titian Vecellio Flora will be on display at the Dongyi Art Museum from March 29 to July 28. The world-famous painting "The Flora" will come to the Chinese Mainland for the first time, and 49 rare paintings by Venetian art masters will be on display. 

Source: Shanghai Tourism

2. Shanghai Plum Blossom Festival Opens 

【Keyword: Plum Blossom Festival】

The 11th Shanghai Plum Blossom Festival opened on February 20, 2024 and will last until March 24. During the festival, Shanghai Haiwan National Forest Park will hold children's art installation exhibition, flower arrangement activities, hiking, Chinese New Year blessing, Hanfu Flower Market, outdoor installation exhibition and garden creation exhibition.

Source: Shanghai Tourism

3. Drama "Journey to the West" Kicks off 

【Keyword: Journey to the West】

The drama "Journey to the West" kicked off on February 24 and will last until March 10. It is staged at the Arts Theater of Shanghai Dramatic Arts Center. The drama is produced by the Shanghai Dramatic Arts Center and directed by Hong Kong director Szeto Wai-cheok. Screenwriter Gu Lei created the text based on several literary works. 

Source: Shanghai Dramatic Arts Center

【Corporate Activities】

1. Accelleron and Stryker to Build New Projects in Pudong 

【Keyword: Accelleron; Stryker】

Pudong New Area held the 2024 Investment and Development Conference on February 18. At the conference, a total of seven projects were signed, including the establishment of regional headquarters in Pudong by Accelleron (China) Investment Co., Ltd. and Stryker (Shanghai) Medical Devices Co., Ltd., the opening of a representative office in Pudong by Chartered Institute of Management Accountants and others. 

Source: People's Government of Pudong New Area

https://www.pudong.gov.cn/0060011/20240219/774967.html

Q&A

Q1: Leaders of Shanghai Municipal Government answered reporters' questions at the press conference of the 2024 Investment in Shanghai Global Sharing Season - On the first workday after the holiday, Shanghai held a city-wide conference on improving business environment and released 7.0 version action plan, what are the characteristics of the latest action plan compared with the previous versions?

A1: This year marks the seventh year of efforts for Shanghai to improve business environment. We insist on system integration and iterative upgrades. Based on the progress in the past six years, we benchmark international best practices, focus on all-round improvement of corporate experience, and practice the service philosophy of "responsive to requests and not to make trouble when there is no need". Specifically, we will implement "five actions" and 150 tasks and measures. This year's plan is an update based on the previous six versions of the action plan, reflecting the continuity and iterative upgrades of the business environment reform measures in the past six years. It is also an "upgraded" plan for optimizing business environment at the current stage. It sets a new direction and plans new measures in the face of new situations and new tasks. Specifically, under the "five actions", our work priorities are further converged and work measures are upgraded.

The first is to benchmark reform and upgrade. Based on the underlying logic and methodology of the World Bank's new business environment assessment system, guided by open and transparent regulatory rules, coordinated and efficient public services, and less time and cost for enterprises, and our reform plan in key areas is upgraded from trying to streamline procedures and documentations and reduce cost to re-engineer the process and explore integration and collaboration, and align with international rules, so as to develop international competitive edges in business environment.

The second is to upgrade public services. We stick to the principle of "being responsive to all requests", encourage the integration of government services and enterprise services, promote online and offline integration, take into account universal services and personalized demands, push for the shift in work priorities from improving the convenience of government services to proactively empowering enterprises to explore all-round development, solve their problems, and support the development and growth of all types of enterprises without discrimination.

The third is to enhance regulatory efficiency. We would not disrupt normal business activities. We will strengthen tech empowerment, and promote the upgrade of regulatory focus from "inspection during and after the event" to "compliance guidance before the event, comprehensive supervision during the event, and law-based tolerant and prudent oversight after the event", effectively improving the quality and efficiency of supervision, and creating a stable, transparent, and predictable environment to safeguard high-quality corporate development.

The fourth is to drive regional innovation and upgrading. We will leverage Pudong New Area, Lin-gang Special Area, Hongqiao International Central Business District and various industry parks as carriers to explore and create business environment that matches the industry ecosystem, and promote innovation demonstrations to shift from offering basic business services to serving the development of the "five centers" and supporting national strategy and high-quality development.

The fifth is to mobilize social resources to improve business environment. We strive to step up social coordination, encourage government departments to strengthen collaborations and consultations with enterprises, business associations, think tanks and media, and listen to the opinions of all stakeholders, address enterprises' concerns more efficiently and create a favorable atmosphere in which the whole society participates in the campaign to create better business environment in Shanghai.

Source: Shanghai Release

Expert Perspective

Several Issues to Be Watched and Addressed by Foreign Businesses under New Company Law

By: He Kan, Chen Leyi, Gao Fangjiao, Liu Zijing, Yang Yanhua (Junhe Law Firm)

This article will combine the authors' relevant experience in the field of foreign investment to summarize some prominent issues that foreign-invested companies need to pay attention to under the new company law, and propose preliminary feasible solutions.

Considering that the vast majority of foreign-funded companies in China are limited liability companies, business types discussed in the article will not include joint stock companies and listed companies.

Q1: Can foreign companies continue to maintain the original equity transfer method, income distribution method, and residual property distribution method?

As to whether foreign-funded companies (mainly refers to joint ventures) can continue to maintain their equity transfer method, income distribution method and residual property distribution method agreed upon in accordance with the Foreign-funded Enterprise Law, the answer may be different under the new Company Law.

(1)Regarding the equity transfer mechanism, since the new company law stipulates that shareholders can make their own agreements, foreign-funded companies can still maintain relevant agreements in previous documents;

(2)As for the income distribution method and residual property distribution method, according to Article 46 of the Regulation for the Implementation of the Foreign Investment Law, foreign-invested companies are allowed to continue to deal with equity transfer, income distribution and residual property distribution according to the original joint venture agreements after adjusting the organizational form and organizational structure. With the promulgation of the new Company Law, the Articles 210 and 236 have made provisions on income distribution method and residual property distribution method. Therefore, on one hand, the new Company Law is superior to the Regulation for the Implementation of the Foreign Investment Law and is more updated; on the other hand, the new Company Law does not amend the current company law in this regard. Therefore, we understand that there is some room for discussion and further verification in legal practices as to whether it is necessary for foreign-funded companies to adjust their income distribution methods and residual property distribution methods agreed upon in accordance with the Law on Sino-foreign Equity Joint Ventures, the Law on Sino-foreign Cooperative Joint Ventures, and the Law on Foreign-funded Companies.